Russia: Analysis From Washington--Organized Crime's Three Faces

Washington, 5 November 1996 (RFE/RL) -- The brutal murder of an American businessman in Moscow once again has called attention to both the rise of organized crime in Russia and the absence of a clear understanding on the part of many people of just what Russian organized crime consists of.

On Sunday, a gunman, as yet unidentified, attacked and killed American entrepreneur Paul Tatum near a luxury hotel in downtown Moscow. His murder has sparked press speculation that he was killed by members of the "Russian mafia" who were disputing his ownership of that building.

But the coverage of his murder in Moscow and the West has shown just how little understanding many in either place have about the nature of the criminal underworld in Russia or indeed its brothers in other former communist bloc states.

Organized crime throughout the region has at least three faces.

The first includes mafia structures familiar to all Western countries: underground criminal groups that supply the population with services such as drugs, prostitution, and loan sharking that the government has prohibited.

Such groups existed in Soviet times as well, and while by no means small, this face of Russian organized crime is certainly the least important of the three.

The second face of organized crime is very different but also has an analog in Western countries. It consists of criminal groups who extort legitimate businesses because the latter cannot obtain protection from the still very weak police and the courts.

It is especially large in Russia because of the general collapse of state authority there.

Last spring, U.S. Central Intelligence Agency director John Deutch said that four out of every five private businesses in Russia were now paying such protection money. He added that such extortion was robbing the Russian economy of as much as $50 billion U.S. dollars every year, an amount far larger than all Western aid and investment combined.

Such extortion extends to joint Russian-foreign enterprises and to foreign enterprises operating in Russia as well. And while American law prohibits such payments, most foreign firms have found a way to make them as a part of the price of staying in business.

Indeed, the man who was killed on Sunday told journalists earlier that if anyone says he is not paying, "it's an outright lie."

Both these faces of organized crime have scared off many potential Russian and foreign investors and have further hobbled the already troubled Russian economy.

But the third face of organized crime in Russia is perhaps the most frightening of all. It consists of people and groups who acquired ownership of state assets during the massive and virtually uncontrolled privatization of the Russian economy.

Because so many of the people who became owners in this way had earlier been the communist officials who controlled these same enterprises, some have described this process as the "privatization of organized crime."

Now, these newly-minted capitalists will do almost anything to extract immediate profits for themselves. Hence, the many jokes about the absurdities of the behavior of what many call the "new Russians."

And now these people will do almost anything -- including the use of violence -- to prevent anyone from challenging their control.

Further, because these people see themselves as capitalists, albeit newly-minted ones, they believe they will soon be "legitimized" by the power of the state. One such Russian mafiosi told two Western businessmen from whom he was extorting money: "Your mafia became legitimate. One day, we too want to be legitimate businessmen."

This is the most troubling face of organized crime in Russia and some of her neighbors for three reasons: First, it is certainly the largest, if not the most dramatic of the faces, embracing almost all of the private sector in Russia.

Second, because so much of its power is based on the survival of Soviet-era monopolies and oligopolies, this face of Russian organized crime helps to perpetuate links between companies and the state rather than to separate these two forces.

And third, this face of organized crime is giving capitalism itself in Russia and the other former communist countries a bad name by providing ammunition to those former communists who have not accepted the transformation of their countries as legitimate.

By focusing attention on all the aspects of Russian organized crime, the tragic death of Paul Tatum may ultimately help these countries to overcome the very forces that were responsible for his murder.